PROGRAM SUMMARY-JANUARY 28, 1999
The Scanlon Plan Approach to Participatory Management: A Case Study of Sears
Licensed Business Unit
Ken Hux, Carolyn Bernstein - Sears Licensed Business Unit
Paul Davis - Scanlon Plan Associates
The successful introduction of a Scanlon Plan program to the Licensed Business Unit of
Sears was presented as a case study at the January program meeting. Members of the guest
panel included Ken Hux, Vice President and General Manager of the Licensed Business Unit
(LBU), Carolyn Bernstein, an dministrative assistant in the LBU, and Paul Davis, President
of Scanlon Plan Associates. The format for the meeting consisted of brief presentations by
Mr. Hux, Ms. Bernstein, and Mr. Davis, followed by small and large group discussions on
how individuals might apply Scanlon Plan principles in their OD practices.
Sears, in the mid-1990's developed "Goal Sharing," a business methodology based
on Scanlon Plan principles, as way to implement the vision of "Sears as a compelling
place to shop, work, and invest." The Scanlon methodology, based on assumptions of
business literacy, problem ownership, participation, equity, competency, and
accountability, is a relatively complex system of committees for intergroup cooperation
between management and labor.
The Licensed Business Unit (LBU) was the first part of the Sears Organization to adopt the
Scanlon Plan. The LBU licenses outside businesses to sell services and products in Sears
Stores. The LBU has a staff of about 15 managers and 15 support staff and generates annual
revenues of $1.5 billion. But that wasn't always the case. When Ken Hux assumed control of
the LBU in 1992 the business was in disarray and on a downward spiral of declining
revenues and profits and high staff turnover. Hux knew a radically different approach than
Sears traditional top
down management methods was required to turn the unit around. He started experimenting
with participatory management techniques. Subsequently, he volunteered the unit as the
place for Sears to initiate "Goal Sharing."
The first phase of Scanlon Plan implementation is a series of votes through which the
organization proceeds. Everyone in the organization must be committed to the plan. Then,
feedback mechanisms communicate how well the participatory management system is working in
terms of attitude and satisfaction as well as productivity and pay. A complex formula was
developed at Sears to calculate these metrics.
Ken Hux, in his presentation, characterized "Goal Sharing" as individually
challenging. Everyone has to do more and be more involved than just doing his or her job.
This approach requires team work and an enterprise wide view of the organization. Not
everyone is comfortable with participatory management. Hux shared his own personal journey
of transformation from a traditional, top-down Sears manager to a believer in
participatory management. He struggled to
let go of the management style in which he had been trained and to embrace the new
concepts. Now, Ken states that he could never return to traditional management after
experiencing the impact of participatory management techniques on the LBU.
Carolyn Bernstein affirmed Hux's testimonial. She described a similar process of personal
transformation. First, learning the business and then growing to believe in the real
commitment of management to the program. Carolyn exhibited a deep sense of personal
empowerment and fulfillment as she described her contributions to the growth in
organizational effectiveness of
the LBU. The financial rewards of "Goal Sharing" were meaningful she said
because she knew exactly what she and her teammates had accomplished to earn them.
The Scanlon Plan is a participatory philosophy of management developed by Joseph Scanlon
during the 1940's and 1950's as a way to integrate the interests of the workforce and the
interests of the firm. Subsequently, Douglas McGregor at MIT elaborated Scanlon's ideas
into the concept of employee involvement.
In the Scanlon Plan an organizational environment is created in which employees have
access to a good deal of information regarding a company's situation, good and bad, and
have the opportunity to contribute to solutions to problems the company faces. Both
workers and management assume responsibility for their actions and share responsibility
for decision making.
Together they seek ways to improve operations so that productivity increases. Productivity
increases result in bonuses to those workers responsible for the improvements and gains
which they help generate. The organizational climate is characterized by high levels of
cooperation based upon congruent goals of workers, management, and the firm. A high degree
of trust is critical for the success of the Scanlon Plan.
Ken Hux's key learning from the experience included the need for the CEO to champion the
program. But the CEO cannot accomplish this alone; everyone must be committed and
participate. It takes years to build commitment to the process. In addition to high levels
of commitment from all levels of management and the workforce, effective organizational
metrics and smaller organizational size are important factors in the success of Scanlon
Plan projects. The Scanlon Plan is not a fast cycle approach to organizational change.
For more information please contact Paul Davis, The Scanlon Plan Associates, P.O. Box
23171, Lansing Michigan 48909. VOICE: 517.332.8927; EMAIL:pdavis@ScanlonAssociates.org;
WEBSITE: www.ScanlonAssociates.org
Robert J. Niemi, Ph.D.
